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How The Bowyer Family Played The College Tuition Bubble

Investments get to be bubbles partly because investors widely believe there is no alternative on which to spend their money. Dotcoms were seen as the only real growth play, so shareholders hung in there even after it had become clear that the pricing was uncomfortably high. Housing possessed a supposed unique level of riskless-ness as did the loans used to finance it. Many investors have figured out that U.S. treasuries are deep into bubble territory, but, they ask ‘What other haven asset is there?’

It’s the same with the college tuition bubble. Look at the comment section of any of the articles I’ve written about this topic during the past three years and you’ll see something like this: “Yes, most diplomas are from second rate schools in second rate disciplines and they are nearly worthless. And tuitions are sky high. But what alternative do we have? How do you get an education without it? More importantly, how do you get a job?”

It’s a legitimate question, one that I’ve been wrestling with for quite some time. You see, I’ve been writing about the college bubble hypothesis for three years, but I’ve been living it for ten.

My oldest son, Christopher, was not college material. You probably have the wrong idea: it’s not that Chris isn’t smart. Chris is brilliant. But brilliance is not enough to make you college material. Something else is needed: at least an average level of compliance. Pliable personalities find it much easier to sit through the lectures, take the exams, write the papers, amass the pre-formulated proportions of certain credit hours in certain prescribed order, and fill out an enormous volume of paperwork for the privilege of entry into all of the above.

Some people find all of that to be easy; in fact, many like being told what to do. It gives them a sense of security. Other people find it all difficult, but do it anyway. The latter often seek release from the sense of institutional claustrophobia by embracing a life style of sexual and chemical anarchy in those enclaves of rebellion known as fraternities.

Chris just couldn’t do it. He couldn’t contort his mind into the arbitrary exercise known as SAT Prep. It was not that he didn’t want to learn. On the contrary, he was a voracious reader. It’s not that he didn’t want to work. On the contrary, he had not only worked for various family businesses from radio production to economic analysis and publishing since he was about 9 years old, but had also started a few micro-businesses of his own; web sites which he was able to sell at a nice little profit.

I understand Chris; I’m the same way. I barely graduated from high school. I would routinely skip class so I could go to the library and read my way through Mortimer Adler’s Great Books collection. College was similar. After an initial two semesters of compliant Dean’s list performance. I started blowing off classes which I didn’t like, dropping out of them, often after the drop out date. But while all that was going on, I was working my rear end off busing tables in the cafeteria, mopping floors, and scrubbing pots…and sitting in the library reading voraciously. A few professors took the trouble to let me learn my way. Mostly, they didn’t get me, and I didn’t get them.

Eventually, I gritted my teeth, switched to a business school, Robert Morris, focused like mad, got good grades and graduated two years later with a degree in accounting. I hated every moment of it. My hair went grey. I got a good corporate job with a solid salary. I hated that too.

After some dues paying I got funding to start an economic think tank. It worked: the foundation rapidly grew in influence and 9 years after graduation, I was invited back to Robert Morris not as a student, but as its commencement speaker. My career since then has been anything but normal and my work and learning style has been anything but compliant.

There are a lot of guys like that out there, and young women too. Christopher was one of them, and he was permitted to go his own way. Only two things were required of him: character and productivity. College, not being essential for either of those, was optional. And he agonized over the options. Lots of people told him that he absolutely must go to college. His mother, my ex-wife, was mortified by the idea that he would not go. But then again, Chris noticed that she had dropped out of a prestigious school half way through and nevertheless had a successful career as a professional proofreader/editor who was so much in demand that she was turning clients away.

Chris talked to lots of people about this, but the clincher for him was the advice he got from Ron Morris. Ron is a highly successful serial entrepreneur whose latest venture is an entrepreneurial talk radio network. Having sold his business for a tidy pile of cash, Ron was constantly receiving pitches from entrepreneurs looking for start-up investments. Many of those came from kids who had just graduated from prestigious universities. He told Chris that if he had a choice between betting on a 23-year old who had just graduated from a top school, or betting on a 23-year old who had worked for a small business, all other things being equal, he would choose the latter. Better still if the 23-year old had founded a small business—even if the business failed. Chris had his answer.

Now, this isn’t fairy tale stuff. He didn’t throw away his SAT prep materials, found Facebook and become a billionaire. He simply did his work for the family business which is largely producing this television program. He also owns and maintains a few websites which generate modest revenue streams (like this), and builds on a sub-contracting basis some sites owned by other people like this. He’s a frequent guest on Ron’s radio show and an occasional guest on Cornerstone Television Network.

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Once again, a man with a J-O-B tells the young they do not need higher education – just family connections. It is laudable that your son had some get-up-and-go and the smarts to build websites. Regrettably, not all young people are sufficiently conversant with computer technology to build websites, especially websites someone else wants to buy. This article is not useful, and does not address the subject of the title – The College Tuition Bubble. Apparently all the author’s family did was NOT send a son to college. That will certainly save tuition money. All this article seems to be is a pat on the back for the author that he had a son with sufficient gumption to get ahead in the world without a college degree. Well good for you, now let’s address the predominant population of youngsters out there not so blessed. Unlike the author I am glad to meet 19 year olds without a declared major. I do not believe the average 19 year old has a grasp of what they want for dinner, let alone what they want to do with the rest of their lives. If colleges still functioned as places of higher learning instead of corporate recruitment waiting rooms, this discussion would not be necessary. There was a time when one went to college to further one’s education. It will be welcome when and if they return to that mission. In the meantime, instead of advising youngsters to go get any job, somewhere, anywhere and forget about college, why not produce a useful article advising colleges to get out the pocket of corporations and DOD and return to places of pedagogy? Mr. Bowyer, you might find yourself leading to a change instead of following in the long line of “what about Bill Gates and Steve Wozniak?” folks looking for a money idea instead of a good life.

If a nineteen year old knows as little as you say, then all the more reason to work for awhile until he can figure out what he wants to do for a living. I think undeclared majors are taking a huge financial risk.

Frankly, I smell the distinct aroma of elitist condescension in your comments. The author’s son didn’t just ‘NOT” go to college … he took responsibility for his own life, and made the most of the opportunities that came to him. Methinks that the decision to air the show he works on goes well beyond his dad.

If only other young men and women like him took such a responsible view of life, instead of EXPECTING that others support them while they go “find themselves” in your vision of “higher learning” and get lost on the journey, finding only frustration and debt at the end.

I learned from my parents, the same thing I taught my own children … that responsibility means balancing what you love to do with how well you want to eat. That is a big reason I am neither in in broadcast communications nor a professional musician; though I would have enjoyed both, the quite common fate of “starving artist” that permeates both fields made me question the prudence of following my “dreams”.

My parents did help me with my college education … but I also helped myself, by taking jobs from pumping gas to driving a bread truck to delaying my graduation in order to take a co-op position, where I learned almost as much about my future profession as I did in the classroom.

And how about we get colleges out of the Federal Government’s pocket, by reversing its politics-driven takeover of the student-loan business? Subsidized/guaranteed student loans have done more than anything else to feed the greed of academia and drive up the costs of getting a college education … and having the government so deeply connected to education funding smacks of the same kind of sweetheart relationship between the funders and the funded that WI just successfully interdicted … and/or the disconnection of the user from the costs that has bolluxed up health care.

The primary driver of innovation and social mobility in this County has historically been the salaried mid-level job with benefits. Your stereotypical corporate job, professional job, state/federal job, teaching position, etc.. Thee jobs pay between $50,000.00 -$120,000.00, offer retirement plans and healthcare coverage.

Colleges fed graduates into salaried entry leveled jobs, jobs which overtime if the employee performed would become a salaried mid-level job.

The only problem that matters is that companies have outsourced both manufacturing, entry-level, and mid-level salaried positions overseas. There are no jobs for anyone.

There is no “market solution” to this problem. Competing with China would mean lowering American salaries so low that people would not be able to support themselves.

This scenario described above is important for many reasons. The ability to innovate, start small businesses, etc.. hinges on the ability of our populace to be self-sufficient.

A college graduate or non-college person who has medical debt, a low wage without a retirement option, who can’t afford to save any money, is a person who is highly unlikely to be able to start a business of their own, or create of follow an innovation of their own. The decline of the salaried mid-level position has ramifications across all levels of our society.

Every entrepreneur I know got started with one of the following (1) family connections to people with money or better connections (2) money from family (3) or a loan secured by a family member or connection. If you know of a bank that will dole out a start-up loan without any security or co-signors, please let me know….. I won’t hold my breath.

If your thesis is that a kid doesn’t need to go to college if his parents own a business he can work at, then great, you are correct. What helpful insight to all those who can afford to add their kid to the payroll.

You are out of touch with today’s “reality.”

1. Income has declined in the past 6 years, while rent has gone up in every major metropolitan area. Not only rent, but food and energy prices. Kids both graduates and non-graduates must live at home.

2. Health insurance costs have skyrocketed, while employers have drastically cut back on coverage. Have you ever had to pay for your own procedures out of pocket? have you ever paid for a cholesterol test ($750.00 for a full panel out of pocket), MRI is $2,700.00 BEFORE the Dr. looks at it.

3. When Chris turns 27, has to get a health insurance plan of his own, as an independent contractor, and starts paying $550/mo for only 80% coverage, you can edit this article and tell me how he feels. Heaven forbid your son gives you the gift of grandchildren. Privately insuring himself, his wife, and a minor child will run him about $1,200/mo.

The fact of the matter is the Baby Boomer generation (yours) grew up, many went to college, you all got entry level jobs at your friends and neighbors companies.

You had the opportunity to “work-up the ladder” and make a secure living for yourself, which gave you the freedom and luxury to embrace your creativity and start small businesses.

Once you worked up the ladder, you destroyed it, you outsourced all the entry-level jobs overseas. You have no regard for your neighbors, the society that is responsible for your success, or your country.

Greed is what ails this country and what in the end will doom us unless we change the course.

Rhody, it seems the thing which you are most adept at producing is excuses. Startup money is a luxury and often a crutch and most small business owners do it bootstrap style. I did. Chris did. I just helped bury a long-term friend and 12 time entrepreneur. Not one of those businesses had startup money. And what is this bunk about families being able to ‘afford’ to hire their children. We didn’t hire our kids out of some pool of capital. They worked hard, early on for little or not money and helped grow the business. They earned their income. You can whine about ‘greed’ and ‘baby boomers’ and how everybody else got some imagined hand out, or you can build something.